Kenya

Competition Has Increased in Kenya's Beer Industry | drinks.ng

The road to controlling Kenya’s lucrative alcohol market has been anything but smooth. Backed by an overall 6.5% GDP growth in 2015, it is a growing market in a country where 22.8% of men and 9.6% of women consume alcohol, according to the World Health Organization.

In 2015, according to Euromonitor, players in the beer category actively engaged in marketing campaigns, and volume sales reached 466 million liters. But this growth wasn’t achieved easily.

Face-off

In 1997, SAB Miller and East African Breweries Limited went to war with each other in what was eventually dubbed the “Beer Wars”, which lasted nearly five years. Eventually, in 2002, SAB Miller shut down its plants and exited the country. Today, the two main manufacturers of beer in Kenya are EABL and Keroche Breweries.

EABL was founded in 1922 and is part of global alcohol conglomerate Diageo. It’s the leading alcohol beverage producer in East Africa, with a total volume share of 71%, according to Euromonitor.

Keroche Breweries

When Tabitha Karanja started Keroche Breweries with her husband in 1997, she had high hopes to give the lower end market an alternative drink to a legal brew. The only Kenyan-owned large-scale brewery in Kenya initially made fortified wine, and then eventually moved into spirits and beer. Its signature brand Summit proved so popular that she received a $50 million loan from Barclays in 2015 to expand production levels from 10 million liters per year to 110 million liters.

“We knew if we did 10-fold whatever we had done, we had a market, so this was this market. And the reason for this is because the beer is naturally brewed and it’s the first one to be done in this country.” Karanja says. “It has no sugar added. So, giving a choice to the people, that was more premium,” she reveals. But even with Keroche Breweries’ expansion, it only controls 2% of Kenya’s beer market, according to Euromonitor. Karanja says she hopes to become a formidable competitor and gain 20% of market share.

“When we compete now fairly into the market, I’ll have no fear,” she says. “I’ll be able to penetrate the market with the quality of my product. Even if they come and go with another one, now we’ll just be benefiting the consumers because we become more innovative.”

The International Brewers

While domestic demand for alcohol is strong in Kenya, the growing middle class has also encouraged international brands to enter the country. United Dutch Breweries (UDB), the third largest brewery in the Netherlands, now exports to 35 African countries, including Kenya. Its best seller is Atlas, which has a higher alcohol content than most local beers and can reach up to 16% ABV.

“The 12% version is selling in most pubs at 200 kilo shillings, which is about $2.” says Daniel Munene, the Kenyan distributor for UDB. “Instead of spending about 600 shillings, you only spend 200. So you target those people who want to drink responsibly, who do not have a lot of money in the pocket.”

As new players enter the market, Andrew Cowan, CEO of EABL, says the company will expand its signature brand in the future to continue attracting consumers.”I think we’ll have a very very healthy, broader Tusker trademark. I think we will champion interesting sides of spirits. We will champion a cocktail culture.” Cowan says. “All this competition just means you got to be better at giving consumers what they want. And therefore, it means to focus on who matters the most, which is the consumer.”